Pike Schools Realtor’s Breakfast

Superintendent Jones

Superintendent Jones

Pike Schools Realtor’s Breakfast is something I look forward to every year. This year was no exception. It’s Superintendent Jones show and he loves telling Realtors about the schools accomplishments, awards and programs. This year I was even surprised to see some excellent Zionsville Realtors that I know show up and they were impressed. One of them even turned to me and asked “why don’t other schools do this?” I don’t have an answer but I know Zionsville schools don’t do this for Realtors.

Pike Schools Awards

Pike Schools Awards

Pike schools have changed over the past 10 years thanks to Superintendent Jones. My son graduated in 1999 from Pike schools and I can tell you they have come a long way.

Check out these numbers, programs and newsletter.

Check out Pike Schools new website

Year To Date Home Sales in Pike Township

I love scatter charts. I look for trends, patterns and prices. The follow scatter chart show the year to date home sales in Pike Township. The bottom is a time line and the left hand side shows the price point.

Click on picture to enlarge

Click on picture to enlarge

Pike Facts;
80 percent of the home sales are $186,000 or under
20 percent of the home sales are over $186,000
The highest price paid for a home was $1,250,000
The lowest price paid for a home was $6,900
The average price paid for a home was $149,966
The median price paid for a home was $122,900
The average days on the market was 79
The average square footage of a home is 1879
The average dollars per square foot is $74.99

16 percent of home sales are distressed sales
(My definition of distressed are HUD sales, bank owned sales, foreclosures, short sales and VA owned sales.)

Distressed sales are falling off in Pike Township as you can see in this chart;

Click on picture to enlarge

Click on picture to enlarge

Here is a chart showing just the past 3 years;

Click on picture to enlarge

Click on picture to enlarge

Currently with 895 home sales this year we are close to breaking the record of last years 1083 but probably not 2013’s record of 1112.

Domino Theory

In the real estate business we occasionally run across a situation where a seller needs to sell their house and get the profits from it before they can buy a new house. In a perfect world a Realtor can set it up so that the seller can close on their current house and purchase their new house in back to back closings. I have done this several times and have learned form my experiences. It is best if you use one title company to do both closings. This way you are not running across town to get from closing 1 to closing 2 title companies. Also when money from the first closing has to get to the second closing title company, the money must be wired which could take hours. The logistics are critical to get the job done.


I recently had a transaction where 3 or 4 houses were involved. Each owner had to get the money from their current house in order to purchase their new house. Hence the domino theory. My listing was the first house to close and everything depended on it to start the dominoes falling.

My listing was a very nice ranch in Pike Township. The sellers had taken excellent care of it and it had great amenities. The sellers were some of the nicest clients I have ever had. The house had a good offer on it in 55 days. We negotiated a closing date a couple months out so that my sellers could find another house to buy although we had already been looking. We found a new house and made an offer. After negotiations were done which included having back to back closings at the same title company we had two dominoes in a row. The sellers of the house that my buyers were purchasing were in the same situation. They needed the profit from their house to buy the next one. They found a new house and were set to close on it the same day but not at the same title company. I am told that there was one house(domino) after that but did not verify.

Everything was set. We all were ready to close July 10th. My sellers had already moved everything out of their house and it was being held by a moving company. They were living in a essentially bare house with 2 very small children which was very challenging. Their plan on closing day was to pick up what was left and put it in their car, do the 2 closings at the title company and meet the movers at their new house to unload their furniture. It just so happened that the owners of the house they were buying had the same idea and did the same thing.

On the evening of July 9th I got a call from the buyers agent who had the buyer for my listing. She had bad news. The lender had checked the buyers credit that day and found out that the buyer had made a late payment. The closings were off. The dominoes were not going to fall in the morning. I was told that it could be a week to 10 days before the lender would allow a closing. They had to verify that the buyer did not owe any money where they made the late payment and get a credit re-score. I notified my seller. They were willing to wait. The sellers of the new home they were buying were also willing to wait.

After massive communications with my sellers, the buyers agent, the listing agent of the house my buyers were going to buy and the lender of the first buyer, we all ended up in a holding pattern. Days turned into weeks and weeks into a month. Patience was drawing thin and at any minute somebody might pull the plug and the dominoes would not fall. My sellers costs were adding up. They had to pay their lender a fee to extend the lock on their mortgage rate. They also had to pay the moving company to store their furniture. The lender was not communicating what was going on which left everyone very skeptical. There were two times during the month that the lender ok’ed the close and then canceled the day before. My seller and I communicated regularly. My main question to them was how badly did they want this new house. There answer was “very badly”. They were willing to wait.

Another challenge came into play. My sellers daughter was starting school. The new school district would not allow her to attend unless the family was living in the school district or they could tell the school when the closing date was. After 4 weeks we had no answers. It meant that the daughter might have to attend the school in their present school district for a couple of days and then transfer to the new district once they closed on the new house. Not a good situation for a child just starting school.

After the 5th week we finally got a verified closing date. It was going to be the day before school started in the new school district. At that point I questioned it. Was it really going to happen?

On August 14th the dominoes started to fall. The lender showed up at the first closing. He acted like nothing out of the ordinary had happen. He even talked about the last two days before closing that he had spent on the golf course. My seller heard that and told me after the closing that he almost threw something at the lender. The lender also gave me a folder filled with information about their company and a stress ball. It was to late for a stress ball. What I wanted was a quart of whiskey. The amount of stress this lender had put everyone through was just unreal. This lender will remain nameless but it is a lender that I have never referred business to and never will.

I am a very patient person. Probably to patient at times for my clients. I did not lose my patience on this transaction but I did write a letter to the lenders branch manager and regional manager. I don’t think it did any good but you never know.

No two transactions are the same in a Realtors life. In my 13 years as a Realtor I can’t remember a transaction that affected so many lives at one time and caused so much misery. Hopefully it will never happen again.

Showings Are Up!

Here is a graph from Centralized Showing Solutions showing amount of showings in price ranges. Centralized Showings makes appointments for Realtor showings for 80 percent of houses listed in Pike Township. As you can see the showings between $60,000 and $160,000 are constant for the past 10 weeks. There was a peak about 10 weeks ago but things slowed down and now they are picking back up. I use charts like this to see if I am getting my share of showings on my listings.

Click Picture To Enlarge

Click Picture To Enlarge

What Are Closing Costs?

Survey on closing costs
I read online this morning a survey that was conducted by ClosingCorp that two in three millennials (18 to 34 years old) who plan to own a home are unaware of closing costs. It also said that 34 percent of potential homeowners are “Not Very” or “Not At All” aware of closing costs.

So…I thought I would try and explain closing costs if your were to buy or sell an average home in Pike Township for $125,000.

Closing costs are all the costs associated with buying or selling a home. Here is a list of some types of closing costs that can be in a transaction. It does not cover all closing costs. Each transaction is different.

Homeowner association dues
Homeowners associations (HOA) usually have yearly fees. For the most part they are due in the beginning of the year. If the home was sold in the middle of the year, the seller would get a credit from the buyer.

Homeowner association transfer fee
A fee charged by homeowner associations that are professionally managed and some that are self managed that covers the costs of paperwork involved in switching owners.

County property taxes
In Indiana property taxes are paid a year in arrears. Property tax payments are billed and due in May and November. If the May 2015 bill was paid, it covers January through June of 2014. The November 2015 bill payment covers July through December 2014. If the property closes today April 1st 2015, the seller owned the house from January 2014 through April 1st 2015 and would be responsible for the property tax. Since the buyer would get the property tax bill in May and November for the year 2014, the seller gives the buyer a credit for property taxes at closing. The credit would also cover January 1st through April 1st 2015. This is standard operating procedure at closings in Indiana. (See Escrows)

Seller paid closing costs to buyer
Depending on how the transaction was negotiated, the seller could end up paying some of the buyers closing costs. There a lot of variables here. Some of them are 1)How motivated is the seller to sell 2)Sellers are more incline to pay some of the closing costs of the buyer the closer the buyer is to offering list price for the home 3)how good is the buyers agent in negotiating.

Seller paid real estate brokerage commission fee
Traditionally the seller pays the brokerage sales commission. If there were a listing agent’s brokerage and a buyers agent’s brokerage involved, the total commission is split between the two companies. If the listing agent is representing both seller and buyer then the total commission goes to the listing agents brokerage.

Fees paid by buyer associated with getting the loan
– origination fee
This is the fee by the lender for getting you the loan

– appraisal fee
Lenders require that the property be appraised. This is the fee that the appraiser charges the bank which gets passed on to the buyer.

– credit report
This is a fee charged by the lender for getting the buyers credit report.

– tax service
A lender fee paid to a tax service provider for information on the real estate property taxes.

– flood certification
A lender fee for a document showing flood zone information.

– flood determination fee
A lender fee paid to the service providing information on whether the property is in a flood zone.

– daily interest charges
When your mortgage is due the 1st of the month you are actually paying for month before. If you bought and closed on a home April 1st, your first payment would be payment would be June 1st but the lender makes you pay interest on the loan from April 1st to the end of the month. This is why most closings are at the end of the month. Less interest paid by buyer.

Down payment
Depending on the type of loan, this could be anywhere from 3 percent of the sell price of the house to 20 percent or more. The lender will require this to get the loan.

– property taxes
Part of the monthly mortgage amount contains an escrow amount for county property taxes. It is usually 1/12 of the yearly amount. It is held by the lender who pays the property tax bill. At closing the lender wants to make sure they have enough escrowed for the first property tax bill. They may require the buyer to put money in escrow in advance.

– insurance
Part of the monthly mortgage amount contains an escrow amount for home insurance that the lender requires. It is usually 1/12 of the yearly amount. It is held by the lender who pays the insurance bill. At closing the lender wants to make sure they have enough escrowed for the first indurance bill. They may require the buyer to put money in escrow in advance.

Lenders title insurance
Title insurance offers financial protection against title problems that could not be found in the public records, are inadvertently missed in the title search process, or those that may arise from fraud or forgery. The title policy a lender requires only covers the lender’s interest in a property.

Sellers title insurance
Title insurance offers financial protection against title problems that could not be found in the public records, are inadvertently missed in the title search process, or those that may arise from fraud or forgery.

Search exam fee / Title services fee
Title company charge to research and process the property.

Closing fee
Title company fee for the actual physical closing. This could be paid by the seller of buyer or split. Depends on how the transaction was negotiated.

The title insurance enforcement fund is established for the following purposes:
To pay the costs of hiring and employing staff in the area of enforcement of title insurance law.

Courier fee
Title companies won’t deliver there own documents because of liability. The hire delivery services to deliver documents and pass the costs on.

Attorney fee for deed/affidavit
This is the document that an attorney prepares that when signed transfers the property to the new owner.

Closing protection letter
Closing protection letter is essentially an agreement from a title insurance company to a lender that indemnifies the lender against any issues arising from a closing agent’s errors, fraud or negligence.

Wire fee
Title company fee charged to pay off existing loans.

Government recording charges
Lender mortgages and lender notes are usually recorded. The county charges fees for recording which get passed on by the title company.

Home warranty
If a home warranty was negotiated in the transaction it would be considered a closing cost.

Here is an example of buyer and seller closing costs on a $125,000 home;
Disclosure – PLEASE NOTE – Lenders and title companies charge different amounts for the same services. It is best to shop around for a lender. They are required by federal law to give you a Good Faith Estimate of loan costs after you apply. Ask your Realtor what title company they recommend and why. A listing agent usually has preliminary title work done (for free) when they list a house. This insures that there won’t be any last minute surprises about the ability to transfer a property right before closing. If a title company does preliminary title work up front, chances are that the listing agent and seller will want to close at that title company although it can be negotiated. This is just an example and these are just estimated numbers.

Seller closing costs

$125,000 Sale price
$  8,750 Brokerage commission
$    400 Sellers title insurance policy
$      5 TIEFF fee
$     25 Wire fee
$     50 Courier fee
$     60 Deed/Affidavit document
$    405 Seller agrees to buy buyer a home warranty
$    280 Search exam fee
$  2,000 Seller agrees to pay some of buyers closing costs
$  1,500 Seller's credit to buyer for property taxes
$     25 Closing protection letter
$    100 -credit- Buyer gives credit to seller for HOA fee
$     75 HOA transfer fee
$    150 Closing fee (shared equally by buyer and seller)
$ 67,225 Payoff of existing mortgage

$ 45,950 Net to seller (usually a check given to seller)

Buyer closing costs

$125,000 Sale price
$118,750 -credit- Lenders loan (95%)
$  2,000 -credit- Seller pays some of buyers closing costs
$  1,000 -credit- Buyer put earnest money down
$  1,500 -credit- from seller for property taxes
$  1,188 Loan origination fee
$     30 Lenders charge for credit report
$     70 Lenders tax service fee
$     20 Lenders flood certification fee
$    400 Lenders appraisal fee
$  1,292 Escrow prepaids (property tax and insurance)
$    225 Daily interest charges by lender
$    600 First years insurance on the house (paid in advance)
$    195 Lenders title insurance policy
$     78 Title company recording fee
$    475 Title company services fee
$      5 TIEFF fee
$    150 Closing fee (shared equally by buyer and seller)
$     75 HOA transfer fee
$    100 HOA dues from time of closing to end of year

$  6,253 Buyer would have to bring to closing*

There could possibly be other charges to buyer and seller. For instance, if the buyer had a home inspection done and wanted something fixed and the seller agreed. The home inspection price to the buyer would be about $300. The repair costs the seller would pay for.

* If the amount is over $10,000 then the buyer has to wire the funds to the title company.